After two days of declines, the banking sector's big gains and corporate reports lifted the FTSE 100 above the water to snap the losing streak.
The banks again outperformed the market with another round of solid gains and were joined by a group of companies that released interim figures today which were mostly in line or ahead of market expectations, heavily contributing to the Footsie’s climb.
Aerospace and defence equipment manufacturer Cobham (LSE: COB) reported significant hikes in profits and sales for H1, primarily driven by its military and government business, gaining about 5.5% in the morning. Consumer goods giant Unilever (LSE: ULVR) said price cuts slashed its profits, but helped increase sales volumes despite the worsening market conditions, sending its stock up 5.6%.
The shares of insurer Aviva (LSE: AV) also were a hot item in the market today after the company surpassed market expectations with a £1.7 billion H1 profit, improving 5% on LSE.
UK broadcaster ITV (LSE: ITV) sold TV show Friends Reunited at a steep discount and reported falls and revenues for H1, yet this was more than investors expected and the stock added 5%.
Finally, after announcing baggage allowance reductions, British Airways (LSE: BAY) released more positive news yesterday reporting a 11% drop in premium traffic in July, which, however, was offset by a 3.5% improvement in non-premium traffic to increase the total passenger traffic for July by 1%. The airline climbed 5% on the news.
The surge was jeopardised by miners, some insurance companies and utilities, which extended own early losses later in the day.
United Utilities (LSE: UU) and Severn Trent (LSE: SVT) declined significantly, shedding 3 and 4.8% respectively.
Engineering company Invensys (LSE: ISYS) declined 3% after Goldman Sachs downgraded it to “neutral” along with removing it from its pan-European buy list.
Just like the FTSE 100, Dow Jones was on the losing side yesterday, dipping almost 40 points. US futures were mixed in pre-trading after Cisco Systems posted a 46% slide in profits, yet opened with gains lifted by the falling number of US jobless claims.
The mixed outlook for US futures cooled off the FTSE 100 at midday after is rallied 50 points in the morning, making it retreat, albeit slightly. The index finished the day with gains of a little over 30 points.
Commodities
Oil didn’t move by much, while metals mostly declined, contributing to the mining sector’s fall.
Gold slipped early, but later improved to US$963/ounce. Other precious metals were mixed. Silver rallied to US$14.75/ounce, while Platinum pulled back again after making good gains yesterday, moving down to US$1,268/ounce.
Base metals did not do that well. Copper declined to US$2.72/pound, Zinc slipped to US$0.83/pound. Nickel declined significantly, dipping to US$8.90/pound.
Oil and gas sector still under pressure
The oil sector continued sliding. BP (LSE: BP) and Shell (LSE: RDSB) both declined insignificantly. Oil and gas player BG Group (LSE: BG) erased early gains to finish flat.
Brent spot crude was above US$74.7 per barrel, while NYMEX crude remained slightly above US$71.
Mid-tier oil companies were mixed. Cairn Energy (LSE: CNE) was slightly in the red, while Tullow Oil (LSE: TLW) added 1% and Dragon Oil (LSE: DGO) slipped 3%. Dana Petroleum (LSE: DNX) was just above the opening level.
Oil juniors showed more movement as Max Petroleum (LSE: MXP) underwent correction after two days of good gains, slipping 6%. US focused Empyrean Energy (AIM: EME) again was on the rise, adding 1.8%. Ukraine focused gas producer, Regal Petroleum (AIM: RPT) declined 1%. Gulf Keystone Petroleum (AIM: GKP) more than doubled its value following an announcement of an oil discovery in Kurdistan. Gulfsands Petroleum (AIM: GPX) also rose, adding 4.3%.
Gold Oil (AIM: GOO) was up 3% after saying it has started production at Burdine-1 well in Colombia.
Precious Metal Companies fall
Aquarius Platinum (LSE: AQP) climbed 2.7% to 282p per share. Johnson Matthey (LSE: JMAT) rose insignificantly, while Lonmin (LSE: LMI) rallied 2.5%.
Junior platinum producer Braemore Resources (AIM: BRR) retreated 10%.
Gold and silve rproducers were mixed. Peter Hambro Mining (LSE: POG) and Randgold Resources (LSE: RRS) both finished in the red with small declines.
Silver producer and FTSE 100 constituent Fresnillo (LSE: FRES) rose about 1%, while FTSE 250 silver miner Hochschild Mining (LSE: HOC) recovered after an early dip, but still ended up in the negative.
Noteworthy movers among juniors included Oxus Gold (AIM: OXS) with a 7.6% surge and Cluff Gold (AIM: CLF), which upped 3.5%. Copper and gold focused junior, EMED Mining (AIM: EMED) jumped 7% on top of yesterday’s gain of over 10%. Patagonia Gold (AIM: PGD) erased Wednesday’s gains, slipping 1.5%. Norseman Gold (AIM: NGL) again improved, adding 2.1%.
Turkey focused gold miner Ariana Resources (AIM: AAU) upped 4.5%.
Kazakhstan operating gold miner Frontier Mining (AIM: FML) slipped 2.2%. Mariana Resources (AIM: MARL) rose 2.3%.
Pan African Resources (AIM: PAF) was down 2.3% and African Diamonds (AIM: AFD) lost 1.5%.
Base metal miners also in decline
Majors Anglo American (LSE: AAL) was 2.6% in the red, while Rio Tinto (LSE: RIO) slid 1.3%. BHP Billiton (LSE: BLT) shed 1%, but Xstrata (LSE: XTA) held steady.
Copper miners followed the trail. Vedanta Resources (LSE: VED), Antofagasta (LSE: ANTO) and Kazakhmys (LSE: KAZ) slipped 1%, 3.8% and 3.3% respectively. First Quantum Minerals (LSE & TSX: FQM) also declined, shedding 3.8%.
London’s only listed pure iron ore producer, Ferrexpo (LSE: FXPO) started with gains, but finished in the red.
Shares in junior miner Noventa (AIM: NVTA), which doubled its values in the past few days, retreated 13% today.
Uranium and copper explorer Kalahari Minerals (AIM: KAH) continued its unrelenting move higher, rising a further 3.1% in the morning. Laterite nickel specialist, European Nickel (AIM: ENK) finished 2.5% in the blue.
South American focused miner Herencia Resources (AIM: HER) dipped 7% and Metals Exploration (AIM: MTL) went in the opposite direction, climbing 5.2%.
Chrome miner Chromex Mining (AIM: CHX) was down 1.5%.
Zinc mining and recycling specialist ZincOX (AIM: ZOX) declined 5.3%.
Insurance, banks, private equity rise
Still inspired by the strong results from Lloyds, HSBC and Barclays, the banking sector continued making substantial gains and lifting the Footsie higher. Royal Bank of Scotland is scheduled to report tomorrow to close the big reporting week for the banks. Insurers joined the party after Aviva posted better than expected profits, yet fell short of sparking any momentum in the sector, which has been on the losing side so far this week and appeared reluctant to climb out of the red today.
Lloyds (LSE: LLOY), HSBC (LSE: HSBA) and Barclays (LSE: BARC) upped 10%, 3.8% and 4.4% respectively, while Standard Chartered (LSE: STAN) slipped 1%.
Aviva (LSE: AV) led the top tier index in the morning with a 7% gain and finished up 6%, yet fellow insurers failed to catch momentum and finished below the opening levels. RSA Insurance Group (LSE: RSA), Old Mutual (LSE: OML), and UK’s fourth biggest life insurer Standard Life (LSE: SL), which posted a 35% H1 profit fall yesterday, were down 2.4%, 3.3% and2%. Legal & General (LSE: LGEN) and Prudential (LSE: PRU) went against the tide and improved 3% and 1% respectively.
Large Cap News
Carillion PLC (LSE: CLLN) said it has been awarded a contract by the Scottish Prison Service to design and construct the new HMP Low Moss, worth in the region of £116million.
The project involves the design and construction of a 700 cell prison located near Bishopbriggs in East Dunbartonshire for which preliminary works are due to start later this year following completion of the planning process with East Dunbartonshire Council. The prison is expected to open in 2012.
Drug maker GlaxoSmithKline (LSE: GSK) and biotechnology developer Vernalis PLC (LSE: VER) reached a collaboration deal potentially worth US$200 million over a Vernalis programme against an unspecified cancer target.
According to the terms of the deal, Vernalis will earn US$6 million in cash upon signing, US$3 million of which will be received through equity subscription by GSK for over 2 million shares in Vernalis, making for a 3.4% stake in the company, at a price of 87 pence each, representing a 4% premium to yesterday’s closing price.
UK broadcaster ITV PLC (LSE: ITV) reported a slump in underlying profits for the first half due to the ongoing fall in advertising revenue, but it is seeing signs that the decline is slowing in the second half.
It also announced the sale of social networking site Friends Reunited at a loss to Brightsolid Ltd, a unit of publisher DC Thomson.
Consumer goods major Unilever Plc (LSE: ULVR) today released its Q2 report and interim management statement for the first half of the year, eclipsing forecasts which propelled the company to a 5.5% gain on LSE this morning.
Most forecasts had Unilever’s sales volumes sliding and sales posting slower growth, but the Rotterdam- and London-based company, which owns the Ben & Jerry, Dove and Lipton brands among others, said underlying sales increased 4.1%, while volumes were up 2% with no regions ending the period in the negative.
Aerospace and defence equipment manufacturer Cobham Plc (LSE: COB) released its interim results today and simultaneously announced the replacement for its retiring Chief Executive Officer.
The Dorset-based Cobham said total revenue in the first half amounted to £952 million, a 51% year on year hike from the equivalent period of the previous year. Pretax profit surged to £139 million from £84 million a year ago, while earnings per share jumped 34% to 9.3p.
Small Cap News
European Goldfields Ltd (AIM, TSX: EGU) said the permitting process for the Skouries copper/gold and Olympias gold/zinc/lead/silver projects in Greece has made important progress.
It said the Ministry of Culture has now officially conveyed the approval by the Central Archaeological Council of Greece of the Preliminary Environmental Impact Study (PEIS) in relation to Skouries and Olympias projects in the province of Halkidiki, in North-Eastern Greece.
GW Pharmaceuticals (AIM: GWP), which develops and manufactures a range of cannabinoid medicines announced that it had successfully placed 7.55 million shares at 78 pence per share – a 1 pence premium to the closing price yesterday.
The bulk of the placing was taken up by US Healthcare Fund, Great Point Partners, while M&G Investment Management took up enough stock to maintain its equity interest in the company.
Australian coal producer Caledon Resources PLC (AIM: CDN, ASX: CCD) noted speculation in the Indian media regarding a potential bid for the company by that country's Essar group, but neither confirmed or denied it.
Caledon merely reiterated comments made in its June quarterly report, confirming it has been involved in discussions with a number of parties which may or may not lead to an offer for Caledon, however these discussions are incomplete and there has been no agreement reached with any party.
Metals Exploration PLC (AIM: MTL) said the exploration permit (EP) covering the Runruno gold-molybdenum project in the Philippines has been renewed by the government for a year.
The EP granted to its unit FCF Minerals Corporation was renewed on July 31 2009 by the Director of the Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR). This extension shall automatically terminate upon the approval of the conversion of the EP to a Financial or Technical Assistance Agreement (FTAA).
Gulfsands Petroleum PLC (AIM: GPX) said it has successfully completed the expansion of the processing capacity at the Khurbet East Early Production Facility (EPF) within Syria Block 26 to approximately 18,000 barrels of fluid per day.
The oil and gas production, exploration and development company with activities in Syria, Iraq and the US, said it has also concluded tie-in operations on the previously drilled KHE-9 and KHE-10 production wells, resulting in an increase in gross daily production from the Khurbet East field from approximately 10,730 barrels of oil per day during June to approximately 14,700 bopd.
Video security systems supplier IndigoVision Group Plc (AIM: IND) today released a trading update, saying it experienced strong sales growth in the second half of the financial year and expected a significant increase in turnover for the full year.
IndigoVision’s sales improved in the Middle East, the Asia and Pacific region, and particularly in North America, bolstered by airports, casinos, banks and the US-Canada border crossings. The group said it expected to post a turnover of £26.3 million for the full year ending 31 July 2009 when the results are released late September, which would represent a 43% hike from the previous year.
Gold Oil PLC (AIM: GOO) said it will production-test the Burdine 4 and 5 wells in the Putumayo Basin in the south of Colombia in the next two weeks after Burdine-1 was successfully tested at a flow rate of 220 barrels per day of light crude.
Once the production tests are concluded the company hopes that all three wells can be put on long term production via the existing Nancy facilities. This involves the expansion of production facilities at the Nancy field, which is less than 2 kilometres away from the Burdine wells.